It’s time for twentysomethings and fortysomethings to stop brawling and start learning from each other. These new-economy heavyweights have put down their gloves and embraced the best of both generations.

By Pamela Kruger and Katharine Mieszkowskilong Read

“These young people are smart, but in ways that can be dangerous. They’re so sure they’re right.”

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“I’ve had managers who had no idea what I did – and didn’t even try to understand.”

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“I was reprimanded a few times for working late. I was trying to change the world, and the company was talking about my hours!”

“Young people don’t always know how to pace themselves.”

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Skeptical programmer: “Do you have an email account?”

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Irate Executive: “Since you were in diapers!”

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Young CEO: “Sometimes I wonder how much bigger this company would be if we didn’t debate everything.”

Older colleague: “We’ve argued over such basic things that I can’t believe we’re even having the conversation.”

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You’re listening to the sounds – real conversations inside real companies – of two generations colliding. Sounds that are echoing through more and more workplaces, as twentysomethings and fortysomethings claim their positions on center stage – at the same time. The images are so familiar, they’re cliches. In this corner, the over-the-hill gang: senior executives who are utterly clueless about technology and dangerously out of touch with markets. In this corner, the kiddie corps: know-it-all Webheads who can’t run their own lives, let alone a company.

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It would be funny if it weren’t so damn counterproductive. Are business executives really the equivalent of professional athletes – people who should throw in the towel before they’re 40? Is gray hair really a legitimate credential for leadership in an economy where change gets measured in nanoseconds, not years?

Maybe it’s time for peace between the generations. Time for both sides to stop fighting with each other and start learning from each other. Can twentysomething plus fortysomething add up to something new – and better?

The four leaders profiled in this article – all from the world of computing and the Web – run companies where people from different generations have stopped colliding and started collaborating. Together, they are devising answers to the tough questions that still cause divisions at most companies: What should people learn? How should they work? What do leaders do? They are reaching across the generation gap to create the best of both generations.

Is Older Wiser?

Candice Carpenter listened in shock as yet another of her ambitious young employees announced his resignation. Carpenter, 46, is chairwoman and CEO of iVillage, one of the Web’s fastest-growing online communities. Seven months earlier, she’d promoted this 26-year-old to an important job at the company, vice president of strategic development and operations, with an understanding that he would stay for at least a year. “You made a commitment!” she said. He shrugged it off. (“We never had a contract,” he explained later.)

His announcement was the last straw. For months, twentysomethings had been coming into Carpenter’s office, waving job offers from startups, and demanding twice, sometimes triple, their current salaries. That show-me-the-money attitude wasn’t what really bothered her. (“We’re an industry where people can double their salaries just by moving across the street,” she says.) What bothered her was how hard she’d been trying – apparently without success – to show young employees the virtues of growing up inside of a company that’s growing fast – thanks to seasoned leadership from her and one of her cofounders, Nancy Evans.

Carpenter and Evans, 48, reached the pinnacle of their professions by paying their dues – learning from mentors who were older, wiser, and tougher than they were. It wasn’t pleasant, but it was part of growing up. “Today you have the natural impatience of youth combined with infinite opportunities,” Carpenter says. “These young people are smart, but in ways that can be dangerous. They’re so sure they’re right. So we kicked some of them out. We felt like we were being held hostage by these twentysomethings.”

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Experience counts: One reason iVillage has become such a fast-growing success is the track record of its founders. Carpenter has been a marketing vice president at American Express, president of Time-Life Video and Television, and president of Q2, the home-shopping channel started by Barry Diller. President Nancy Evans, a founding editor of Family Life, is a former president and publisher of Doubleday, and former editor-in-chief of the Book-of-the-Month Club. Their credentials have helped iVillage raise $67 million from investors and build an online community that generates more than 66 million page views per month.

Youth counts too: Back in September 1995, when Carpenter and Evans cofounded the company, they knew that recruiting great young people was a make-or-break challenge. “We had the peripheral vision and sense for the business that experience brings,” says Carpenter. “But we needed a young staff, people with the medium in their blood.” They got what they asked for. Almost half of the company’s 210-person staff was born after 1968.

In short, iVillage is an organization run by fortysomethings, where twentysomethings do most of the work. That generational fault line has been a source of innovation – and frustration. Problems began to surface about a year after the company took shape, when Carpenter and Evans made a decision to reposition iVillage. They’d started out as a company devoted to creating online communities where people could discuss “life issues” such as parenting, work, and careers. But the closer they watched the Web, the less they liked their business. Content-based chat sites weren’t taking off. Meanwhile, 85% of iVillage users were women – a surprise, and a major market opportunity.

So the company’s online business transitioned away from its original model to become iVillage: The Women’s Network. The strategic retooling was popular with both investors and users – page views increased from 9 million in June 1996 to 41 million a year later. But the shift unleashed resentment and confusion among more than a few staff members. “Some people had a messianic zeal about the old direction,” Carpenter says. One young executive took to criticizing the founders – and their move to reposition iVillage – to job candidates he was interviewing.

There were other problems. “A few young mavericks were running amok,” Carpenter says candidly. “They weren’t good at working with other people. They didn’t understand our business model. They were making dumb deals with content partners.”

So Carpenter and Evans used that strategic inflection point as an opportunity to redesign the organization. They nudged out about 10 of their high-level staffers – all in their 20s and 30s – and replaced them with “gray hairs” – seasoned professionals who were more in sync with the founders’ values. “We hired the same number of grownups as the twentysomethings who we lost,” Carpenter says. “They brought discipline and perspective to the process.”

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Carpenter and Evans also reinvented their relationship with the young people who remained, offering their most promising staffers a new deal: Show us some staying power, and we’ll show you how to become real businesspeople. “We’d had mentors who’d raked us over the coals,” Carpenter says. “And we’d stayed around long enough to see the consequences of our decisions. If all you do is move around, all you do is make mistakes.”

Thus began an intense but informal program that Carpenter calls “radical mentoring.” It was, for her, an exercise in back-to-the-future management. She graduated from Stanford University in 1975, spent seven years as an Outward Bound instructor, and went to the Harvard Business School. Then she joined American Express as a “wild child,” unschooled in the corporate environment.

Her boss at American Express made sure that Carpenter learned what she needed to know – whether or not she wanted to learn it. When she hired a vendor without consulting colleagues, she infuriated several people. “My boss dragged me into a room and said, ‘Don’t ever do that again.’ I just didn’t get corporate politics.”

Next, Carpenter’s boss gave her a plum assignment, which she bungled – presenting a deeply flawed financial analysis to a group of senior executives. So her boss made her deliver the presentation again, until she got it right: “I had to know this stuff to get to the next level. He kicked my butt and saved me from myself.”

It was, says Carpenter, a case study in radical mentoring: “If you are a great radical mentor, people will never forget what you did for them.” The job of a radical mentor is to “move people along faster than they want to go. But accelerated growth hurts.”

Radical mentoring at iVillage is both more demanding and less structured than traditional mentoring programs. Every few months, Carpenter and Evans choose a different rising star to coach. There are lunches, private meetings, occasional late-night phone calls. More important, they give the staffer feedback – direct, sustained, brutally honest: “People don’t grow if you’re soft with them.”

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Indeed, Carpenter likes to compare herself and Evans to drill sergeants who are running a boot camp for young leaders. Their focus is on the big questions: How do you separate personal complaints from company matters? How do you choose among prospective business partners? “We do not coddle our staff,” Carpenter says. “We feed them cod-liver oil. In return, we promise that they’ll become ass-kicking senior managers.”

Take Hillary Graves. One of iVillage’s rising stars, Graves, 28, rushed into Carpenter’s office 18 months ago to complain that a consultant was excluding her from meetings. Carpenter’s advice: Get over it. Focus on your deliverables, and you’ll be rewarded. “I was trying to get her to discard the ‘what about me’ issues, which are what you tend to focus on when you’re young,” Carpenter says. “Complaining doesn’t get you anywhere. Coming up with solutions to problems moves you up the food chain.”

So a few months later, when Graves, then a junior marketing manager, noticed that iVillage’s ad agency was doing a poor job of promoting the company on the Web, she brought Carpenter a solution: Hire a small agency that was hungry for the company’s business. The idea worked. Carpenter later promoted Graves to vice president of online marketing, and a few months ago, Graves was named one of 25 Women to Watch by Advertising Age.

Macdara MacColl, 33, is another success story. Back in 1997, she came to Evans and asked to be promoted to managing director of Parent Soup, one of iVillage’s leading destinations. Being a producer at iVillage was, MacColl says, her first “real job.” And in her first year, she had gained a reputation as being smart, but an “upstart,” someone who could be insensitive and shoot from the hip. “Nancy told me, ‘People don’t like working with you, and I think that will keep you from succeeding,’ ” MacColl recalls. “Hearing that was one of the most painful moments of my life.”

But Evans helped MacColl, now vice president of member service and marketing, to polish her style. For months, each time the two attended meetings together, Evans took notes on MacColl’s behavior. Then she’d do a review: “This is where things went awry; this is the comment that emptied the room.”

Carpenter feels good about the culture that’s being created at iVillage. She says many young staffers now feel the kind of loyalty to their company that Carpenter felt to her former companies. “Our age is looking better to people,” she says. “It’s like, ‘Hey, they really do have perspective.’ People are happy to have adult leadership.”

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Who’s the Boss?

When Tony Fadell reports to work, an alarm goes off. Literally. Near the door to his office, two flashing red lights indicate that the boss has entered the building. The alarm is a hint that business-as-usual is not the business of Philips Mobile Computing Group, a fast- moving subsidiary of the Dutch electronics giant. Chief Technical Officer Fadell is the visionary behind the Velo handheld PC and the Nino palm-sized PC – sleek products designed to compete in one of the hottest arenas of personal computing: personal digital assistants.

What’s intriguing about Fadell is not just that he’s leading a fast company inside of a slow company. It’s that he’s leading a company filled with people older than he is – and becoming a better leader in the process. Fadell, 29, is the highest-ranking technical official in a high-profile division of a company with 265,000 employees. He is also the youngest person in the division, aside from a few administrative assistants. It’s a tough position to be in.

“The people who work for me don’t ask me to go to lunch, because I’m ‘management,’ ” Fadell says. “And the people at my level can’t relate to the fact that I’m so young. I guess I scare a lot of people.” Well, not everyone. “I’ve never worked for anyone this young before,” says Jim Dumont, 44, manager of product-creation services inside Fadell’s group. “And I’ve never worked for anyone with such energy and enthusiasm. Tony believes we can do anything. There’s a bright-eyed wonder about him.”

The wonder is that Fadell is at Philips at all. He is a poster child for youthful exuberance and break-the-rules innovation. Ask Fadell where he’d be if he lived in the era before computers, and he responds, “In jail.” In high school he was a phone phreaker. By the time he graduated from college, he’d helped start four companies.

At age 22, fresh out of the University of Michigan, Fadell signed on with General Magic. It was, at the time, one of the most glamorous startups in Silicon Valley. Fadell began as a lowly diagnostic software engineer and rose to the exalted position of lead systems architect. He routinely worked 100-hour weeks. “I knew nothing about anything else in the world,” he says.

But General Magic’s ambitions couldn’t rescue its products, which failed miserably. Fadell thought he knew why. So, at age 26, he mapped out a plan for a new generation of handheld devices and brought it to Philips. It took the company 48 hours to sign him on.

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It took Fadell less time to wonder about what he’d signed up for. First, he suffered through the company’s orientation program – including mandatory drug testing. “It was so oppressive,” he recalls. “It was like, ‘Hi, welcome to Philips. Here’s a shitload of bad video and a lot of paper to fill out.’ I’m like, ‘Why the hell would I subject myself to this misery?’ ” Then he arrived at his office. “I was locked up in this little place with fake paneling. It was dark and dank. I thought, ‘What am I doing here?’ “

But there he was. Fadell was a high-ranking executive – and he was just 26 years old. “I had such chutzpah,” he says of those days. “I was always right. I would never admit I was wrong. I was always questioning the direction of the company.” But he never questioned the direction of his own life. During his three-and-a-half years at General Magic, Fadell lost touch with his family, screwed up his personal relationships, gained 40 pounds and then lost 50. He and his cohorts were totally one-dimensional. “I was a real jerk,” Fadell says, “a know-it-all. I was loud, obnoxious, narrow-minded.”

Now it’s nearly four years later. Fadell’s presence at Philips has certainly rubbed off on the company. As a condition for joining, he demanded that his team be allowed to operate like a startup. The Mobile Computing Group got its own building, with walls painted yellow and purple. There were open cubicles, free soda and fruit. The mandatory drug-testing policy didn’t apply. At the group’s launch party, Fadell served as the deejay.

But the impact of his presence went beyond matters of style. He fired a handful of older employees who wouldn’t accept him as their manager: “They’d say, ‘I’ve never worked for somebody this young,’ or ‘Who is this kid trying to tell me what to do?’ ” And the kid who’d mocked Philips’s condescending orientation program got his own HR department – and began developing a new orientation program.

So much for the impact of Fadell on Philips. What about the impact of Philips on its young star? It’s been surprisingly profound, he says. The toughest part was reinventing his personal style – making the transition from brash upstart to responsible leader, from know-it-all engineer to one-for-all peer and coach. “I’d hire people and say, ‘You have to do things this way.’ I wasn’t leading – I was giving instructions. If people didn’t do things my way, I went nuts. It took me a couple of months to realize that I was tearing the team apart.”

Fadell also recognized the power of consistency. It’s perfectly natural for young engineers to ride a roller coaster of exuberance and despair. It’s destructive for leaders to take that same ride. “I’ve learned to control my emotions,” Fadell says. “It’s so easy for people to misunderstand – even when the emotions are positive. When I get excited, I get loud. It’s amazing how many people think, ‘Tony is yelling,’ as opposed to, ‘Tony is having a fun conversation.'”

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Fadell’s senior colleagues agree that he has made progress – and argue that he has plenty more to make. “There are lots of people here, even young people, who don’t share Tony’s urgent, high-energy style,” says Alan Soucy, 43, general manager of Mobile Computing. “One of his challenges is to motivate people who need a quiet, predictable environment to get their work done.”

Fadell has heard those criticisms: “The senior people here have helped me learn tolerance for different ways of working. It’s about me becoming more emotionally mature.”

Which is not to suggest that Fadell, at the ripe old age of 29, has forgotten his roots. This summer, he spent 10 days away from Philips attending industry conferences. When he returned, he walked into his first big meeting – with his hair bleached white. Two years ago, the older managers might have bristled at his fashion statement. This time, one marketing manager yelled, “Look! It’s Billy Idol!” Fadell enjoyed the moment: “Let’s put it this way. The guy who hired me is a gentlemanly Brit who reports to the head of a $55-billion business. And the last time he saw me, I had bleached-white hair.”

“That’s the kind of atmosphere Tony has created around here,” says Dumont. “I’ve seen a lot of change in him. By the time he’s 35, he’ll have had so much experience organizing companies and managing people that he’ll be one of the leaders of Silicon Valley.”

You Call This Work?

The young programmers had been working 24 hours a day for weeks. And in just a few days, Sony Corp. was scheduled to launch The Station, its online entertainment network – already six months behind schedule. But the software had bugs. Mark Benerofe, 39, the senior executive in charge of the launch, worried that more delays would make Sony lose faith. He also worried that his programmers were about to crack.

The solution: He’d pull the next all-nighter. Benerofe asked his director of systems and operations, Mark Kortekaas, 29, for a little technical advice. Then he sent the entire crew home. He found a sleeping bag and an alarm clock, and spent the night monitoring the servers that had been crashing.

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To his staff, virtually all in their twenties, Benerofe’s all-nighter was proof that their boss wasn’t one of those middle-aged, out-of-touch, empty suits who doesn’t have a clue about what it takes to create great products on the Net. “I’ve had managers who had no idea what I did – and didn’t even try to understand,” Kortekaas says. “Mark is different. He gets it.”

It’s one of the toughest challenges facing senior executives in fast-moving companies filled with young people: How do you provide direction without trampling on your team’s passion for autonomy? How do you stay part of the team without letting the inmates run the asylum? It’s a challenge Benerofe has mastered. “If there’s one thing I’ve learned from youth culture, it’s that playing the hierarchical game is dumb,” he says. “You have to share knowledge. And you have to earn your stripes. You have to show that you have five times as much energy as anyone else.”

It’s strange, of course, that a 39-year-old executive has to earn his stripes. Especially an executive like Benerofe, who spent most of his career as a boy wonder: one of the youngest executive producers at CNN, the youngest director at Prodigy, and a hard-charging manager at Microsoft, where he initiated the MSNBC partnership. But in the youth-obsessed world of the Web, Benerofe is a gray hair. Recently, when he lunched with a young programmer at a Chinese restaurant, Benerofe had to explain the menu: “He was such a kid, he didn’t know anything but chow mein.” Then, in the middle of lunch, the programmer, skeptical of his companion’s Net-cred, asked, “Do you have an email account?” Benerofe couldn’t help himself: “Since you were in diapers!” he replied.

Part of Benerofe’s style is to recognize the importance of an informal workstyle to the people around him. The Station, one of the Web’s most popular games and entertainment sites, sits inside Sony Online Entertainment, which sits inside one of the world’s biggest entertainment conglomerates. But he runs the unit like a startup. He ignores company rules about working hours, vacation time, and sick days. “I get paged at 2 a.m. when a server goes down,” says David Berk, 26, a senior systems engineer. “If Mark expected me to come in early the next morning, I wouldn’t stick around.”

Indeed, Benerofe treats his staffers better than they might treat themselves. “This might be the only industry where people would volunteer to work 24 hours a day,” says Matt Rothman, 40, the former general manager of Sony Online Ventures who hired Benerofe. “Young people don’t know always how to pace themselves. Mark helps them do their work without killing themselves.”

When one of his producers, Ines Ferre, 25, sent him an email from work on a Saturday, Benerofe wrote her back – and urged her to take some time off: “He thanked me for my work. He also said he was worried about me burning out.” So she took a vacation.

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But Benerofe’s most important role is as a buffer and champion – resisting bad ideas from above, celebrating great performances from below. Once, when a Sony executive in Los Angeles licensed a new technology for The Station’s operating system, he emailed Benerofe’s programmers, insisting they install the technology at once. The programmers were irate: They considered the technology worthless. They worried that installing it would distract from real work – revising Jeopardy!, the site’s most popular game.

“Why would we annoy our loyal following by installing this stuff?” asks Berk. “Just so some guy in LA, who hardly ever uses a computer, could feel cool?” He brought the problem to Benerofe’s attention. “It dropped off the face of the earth,” Berk says.

But as Benerofe insulates his staff from the hierarchy, he also makes sure that it gets lots of visibility. Last winter, Benerofe was part of a forum for top executives where Sony unveils its latest products. In the middle of the session, he phoned Ferre and Berk and invited them to attend. Later, sitting between Ferre and Berk, in a room with Sony President Howard Stringer and 50 top Sony executives, Benerofe made sure that his staffers were conspicuous.

“People say this generation is disloyal,” Benerofe says. “But they’re not disloyal. They’re focused on their professional growth and learning. They should be.” Berk agrees: “Inside a corporate monolith, it’s easy to feel like you’re some anonymous person. Then you find yourself in a room with all these people you’ve heard about for so long. I felt really important in that session.”

Though he acts like one of the kids, Benerofe, who’s balding and has a middle-aged paunch, can’t escape occasional jabs about his age. “The good thing about Mark,” Berk says in front of his boss, “is that he doesn’t try to get in there and mess with code.” The boss, who recently left his full-time affiliation with Sony to consult with the company and return to Vortex Communications, a strategic-planning firm that he formed six years ago, laughs it off. “I have a pretty high tolerance for talented people,” Benerofe says. But on bad days, when he is at his “most insecure,” he admits that he looks at some of his young stars with admiration that borders on envy: “Why didn’t I have their skill set when I was 25?”

How Different Is Different Enough?

It was an ordinary task, really: i-traffic Inc., a fast-growing online marketing agency for merchants, had a conference room that needed painting. But Scott Heiferman, 26, the company’s founder and CEO, had vowed that his young company would never be ordinary. So he hatched an idea. Five recruits were scheduled to start work in a few days. Why not let them paint the room?

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“I thought it would be a great way to get our message across,” says Heiferman, an intense, restless, self-described computer geek. “We’d get the new hires together and hand them a brush: ‘Your job is to make your mark on the company. Start today!’ We don’t want people here to do things the way they did at other places.”

His two partners – each more than a decade older than Heiferman, both refugees from established advertising agencies – thought that their colleague was sniffing paint fumes. “Shouldn’t we get a professional?” worried Peter Meluso, 38, i-traffic’s chief service officer. After all, the company’s funky loft space in SoHo had ceilings that were 18 feet high. “Do we really want people climbing ladders?” he asked.

But Heiferman had already bought the paint (bright orange, same as the company logo). So he and his older colleagues compromised. No ladders – people would paint only as high as they could reach. It made good sense for safety, less sense for finishing the job: A few days later, an impatient i-traffic veteran finished painting the wall on his own. But for months, the image of that half-painted wall lingered – a small reminder of a big challenge that the two generations at the company wrestle with every day.

“There’s a reason that old-time agencies haven’t done well online,” Heiferman says, sitting at an orange metal table that serves as a conference table. “They stuck to their old ways while an entirely new medium was emerging. On the other hand, how much do you really need to reinvent the wheel? Sometimes I wonder how much bigger this company would be if we didn’t debate everything.”

Scott Heiferman has always done things differently – and always without apology. Back in 1994, shortly after he graduated from the University of Iowa, he worked at Sony Electronics, where he helped build some of the company’s first Web sites. He was a Web-commerce pioneer, and he relished bucking conventional wisdom. He even invented a job title, Interactive Marketing Frontiersman, to reflect his role. “At Sony, I was reprimanded a few times for working late,” he marvels. “I was trying to change the world, and the company was talking about my hours!”

These days, Heiferman is so convinced that i-traffic is without peer that he keeps inventing new, one-of-a-kind taglines to describe it. Early on, to win credibility on Madison Avenue, he called his company an “online media-planning agency.” Then it became a “traffic-driving agency.” Later, a “linking agency.” Now it’s an “online merchandising agency.” What Heiferman won’t call it is an ad agency. “We don’t do advertising,” he insists. “We are crusaders for targeted marketing. Advertising wouldn’t be so despised if its messages were more meaningful and relevant.”

What everyone else calls i-traffic is a roaring success. The company has more than 70 employees, annual revenues of more than $5 million, and a client list that includes Disney Online, CDNow, and Eddie Bauer. Indeed, for Heiferman, success almost came too fast. He launched i-traffic in February 1995 out of a cramped apartment in Astoria, New York. Within months, he had eager clients, glowing press – and a strong suspicion that he was in over his head. “I was playing around,” he says. “I didn’t know what I was doing.”

Enter the grownups: Ed Dintrone and Peter Meluso. Dintrone, 37, i-traffic’s chief team officer, spent eight years at Bates USA, where he held positions in media buying, media planning, and account management. Meluso, i-traffic’s chief service officer and Dintrone’s former boss, spent nine years at DeWitt Media Inc. and worked as well at Backer & Spielvogel and at Grey Advertising.

Meluso and Dintrone were established players inside established agencies. They knew how to design procedures, control costs, meet deadlines. They were what i-traffic needed – and what made Heiferman crazy. Still, he made the two industry veterans his partners. “I had visions of building a great agency,” Heiferman says. “I thought it might be nice if we had people here who had some idea of what an agency was.”

But what looks good in theory doesn’t always feel good in practice. The new arrivals had deep philosophical differences with their young partner, and those differences spilled into every decision. Meluso and Dintrone “came from the traditional ad agency world,” Heiferman says, “where people begged to get into the industry and were treated like dirt. I came from a world where talented young people have lots of options.” Meluso had his own misgivings: “We’ve argued over such basic things that sometimes I can’t believe we’re even having the conversation.”

Some of those philosophical differences involved matters of style: Just what constitutes professional behavior at work? Heiferman is a “student of life” in organizations, and he understands the power of symbols. He believes that how people conduct themselves at work – what they wear, how they talk – shapes how a company conducts itself in the market. “Symbolism can wake people up and make them think,” he says.

During one retreat, for example, Heiferman insisted that everyone – including i-traffic’s three leaders – wear white lab coats while they discussed the need to be “more scientific” about marketing on the Web. “I wanted to hit people over the head with the idea that if we use blue instead of red in a banner ad, it had better be because we’ve tested it and found that blue gets better results,” Heiferman says. Dintrone thought the idea was “hokey”; Meluso thought the coats were a waste of money. “It turned out to be a lot of fun,” Meluso says. “It was a great idea.”

Other differences involved timeless questions of policies and procedures. Back in 1996, Meluso asked Heiferman if he could see the company manual. In response, Heiferman sent an email to the entire staff, which, he said, constituted the company manual. It was one sentence: “Use your best judgment.” Meluso fought with Heiferman. What if one staffer accused another of sexual harassment? Wouldn’t the absence of a policy leave the company liable?

For more than a year, Heiferman wouldn’t budge. Like most Internet startups, i-traffic never had official policies about vacations, sick leaves, or start times. “It was a matter of principle to me,” Heiferman says. “Environments with the fewest rules create the most innovative thinking. The only way we’ll succeed is if we keep thinking outside the box.”

The stalemate started to break when Meluso, who was responsible for personnel matters, hired a human-resources consultant. She noted that i-traffic was approaching 50 employees, and that companies with more than 50 employees must comply with a list of equal-opportunity and workplace regulations, which usually means notifying people of their rights in writing.

So Heiferman and his partners hit on a solution: The company manual would be two documents. One would lay out the legal niceties. The other–which Heiferman insisted on calling the “official” manual–would lay out the mission and core values. “I don’t see it as a compromise,” Heiferman says. “I see it as a better solution. We have a policy manual that is inspiring, plus we’ve fulfilled our legal obligation.”

That agreement was the first in a series of accommodations that has changed the dynamics inside i-traffic. Last year, for example, Heiferman proposed that the company reinvent how it charged clients. Rather than base fees on commissions, he proposed basing fees on “bounties”–a percentage of the dollars that i-traffic’s work generates. Tying fees to sales, page views, or other tangible metrics, Heiferman argued, would send a message that i-traffic believes in its work. “The old saw of this profession is that it’s more about golfing with the right person than getting results,” he says. “Let’s overthrow that world by making ourselves accountable.”

It was a radical idea. But Meluso and Dintrone didn’t balk. Their major concern was to ensure that the company met its basic expenses as it navigated such uncharted financial waters. Their solution: Charge clients lower-than-usual fees, plus receive performance bonuses for meeting sales targets or other goals. About half of i-traffic’s clients now use this fee structure, and it’s reshaping the company’s business. “We’ve taken some short-term hits for doing these arrangements,” Heiferman says. “But we’ve turned the corner.”

Heiferman has turned a personal corner too. He’s learned to value the experience of his partners. “I’m convinced that this company would have faded away into pointlessness if I hadn’t pushed my vision,” he says. “I’m also convinced that we’d have derailed if Ed and Pete hadn’t asserted their points of view and perspectives.”

Pamela Kruger is a contributing editor, and Katharine Mieszkowski is a senior writer at Fast Company.

A version of this article appeared in the September 1998 issue of Fast Company magazine.